A Budget Requiring Society to Indicate its Choice

by swisscham in Consulting, Legal, Services, Tax

Agnes Chan, Managing Partner for Hong Kong and Macau, EY, said: ÒBased on different assumptions and scenarios, the Working Group on Long-Term Fiscal Planning set up by the Financial Secretary warned that a structural deficit could surface in Hong Kong within 7 years. However, given that the Group forecasts that the projected government revenue for 2041/42 would be 19.8% of Hong KongÕs GDP, the dreaded structural deficit could be avoided if Hong Kong adheres to its long tried-and-tested policy of pursuing fiscal discipline. One key plank of Hong Kong’s fiscal discipline has been to maintain public expenditure within 20% of GDP. If for whatever reason future public expenditure exceeds 20% of GDP on an annual basis Hong Kong society as a whole will face a painful and difficult choice, namely whether to reduce public expenditure, increase revenue by taxation within the framework of the Basic Law, or run the risk of a structural deficit.Ó

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